As this year develops, the economy is stronger than it has been in a long time. Yet the process of spreading out the wealth and creating strong growth has yet to come together. While there is little doubt that our image of the economy is changing, some important things have not. The most important aspect of our economy, that it works for everyone with some degree of equity, is not changing much. That will keep our politics in turmoil for some time to come.
The reason for this is simple: the US Dollar is incredibly strong and is likely to remain so for years. This means that manufacturing, the life blood of the heartland, will not return soon. The anger over this, blaming China and Mexico and everything except the automation and accumulation of wealth which really drives it, will certainly continue.
This is a repeat from 2013. What’s amazing is that the Underground Economy, that part which is off the books, has not been studied properly for a solid five years. It may still be 12% of GDP, but we don’t really know.
It’s good to have a lot of money, assuming that not everyone has a lot. Inequality is apparently bad when it gets too big, but it also makes the whole economy possible in small doses. But how much money is really out there, and where is it going? It turns out that this is more complicated – and hidden – than most thought.
The rapid pace of change has created a world filled with excitement and energy. At the same time, it’s created a world filled with anxiety and fear. At the intersection of both of these is hatred, distrust, disrespect, and every other force you can think of which can divide people. Rather than bring us together, closeness has us running to define boxes to hide in, regardless of how small.
The great force which should unite but instead often confuses and separates is the driving force of our time: technology. That one simple word is the savior and excuse all at the same time. But what is it, really?
It was a dark and stormy night …
Ten years ago, I started Barataria with that perfectly awful line. It was indeed a cold, dark evening in April filled with a sense of anxiety. Where has all this gone in ten years? You be the judge.
Through the first decade of Barataria, one theme becomes clear. There is always hope, there is always a better way if we just figure out how to talk honestly about what’s wrong and how we have to work together. The exceptions to this theme are the most illuminating. This post is from January 2010, the low point in the recent Depression. The distinct lack of hope is a bit chilling.
What would make a recovery sustainable? If you ask an economist, they’d tell you that what makes any economy grow and prosper is, ultimately, what they call “productivity gains”. That’s the ability to make more with less that allows a people to propser. During the 1990s this was given as the reason why interest rates could remain low and we could have one Hell of a party – a sloppy, hazy bender. We live in the hangover that resulted, but have we really learned how intoxicating this one, simple idea is?
In celebration of a decade of Barataria, I have to present another repeat. This is from March 2008. It’s an interesting time in that it was six months after the stock market peaked and six months before the financial collapse became obvious. One of the great themes of Barataria since this time has been how we’ve seen it all before and we’re about to see it again. The real story here isn’t that I called it at this time – it’s that so few people saw what was obvious as it happened around us.
Imagine that a new technology comes along that spawns a whole new industry. Not only is this industry a revolution in how people lead their lives, it’s immensely popular and generates a big pile of cash. The field starts out wide-open with many small entrepreneurs, but gradually they become rich as they are bought out by a few big players. Soon, the industry has consolidated and re-investment slows dramatically. Those who made big money start to put it into real estate, specifically in Midtown Manhattan, Florida, and Los Angeles.
By the time you read this, the big news is likely to be jobs. It hasn’t been a hot topic since the election, and most of what was said during that strange period wasn’t exactly true. The big job gains for February, along with a large round-up for January, make it impossible to ignore.
The economy has definitely turned around.
It’s all over but the shouting, of which there will be a lot. There is little doubt that Republicans will claim credit for a big turnaround in 2017, which will be utter crap. This has been a long time in the making and things have not been actually bad for a long time. Nevermind. Positive news will feed on itself and everyone will be happier.
But there is one final twist to the very good news – it’s really in the adjustment.